Correlation Between Linde Plc and Lanxess AG
Can any of the company-specific risk be diversified away by investing in both Linde Plc and Lanxess AG at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Linde Plc and Lanxess AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linde plc Ordinary and Lanxess AG, you can compare the effects of market volatilities on Linde Plc and Lanxess AG and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Linde Plc with a short position of Lanxess AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linde Plc and Lanxess AG.
Diversification Opportunities for Linde Plc and Lanxess AG
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Linde and Lanxess is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Linde plc Ordinary and Lanxess AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanxess AG and Linde Plc is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Linde plc Ordinary are associated (or correlated) with Lanxess AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanxess AG has no effect on the direction of Linde Plc i.e., Linde Plc and Lanxess AG go up and down completely randomly.
Pair Corralation between Linde Plc and Lanxess AG
Considering the 90-day investment horizon Linde plc Ordinary is expected to generate 2.59 times more return on investment than Lanxess AG. However, Linde Plc is 2.59 times more volatile than Lanxess AG. It trades about 0.05 of its potential returns per unit of risk. Lanxess AG is currently generating about -0.22 per unit of risk. If you would invest 45,731 in Linde plc Ordinary on September 2, 2024 and sell it today you would earn a total of 368.00 from holding Linde plc Ordinary or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linde plc Ordinary vs. Lanxess AG
Performance |
| Timeline |
| Linde plc Ordinary |
| Lanxess AG |
Linde Plc and Lanxess AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linde Plc and Lanxess AG
The main advantage of trading using opposite Linde Plc and Lanxess AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linde Plc position performs unexpectedly, Lanxess AG can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lanxess AG will offset losses from the drop in Lanxess AG's long position.| Linde Plc vs. PPG Industries | Linde Plc vs. Ecolab Inc | Linde Plc vs. Sherwin Williams Co | Linde Plc vs. LyondellBasell Industries NV |
| Lanxess AG vs. Sherwin Williams Co | Lanxess AG vs. Air Liquide SA | Lanxess AG vs. Air Products and | Lanxess AG vs. Ecolab Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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